Hotel asset management and strategic advisory services provider CHMWarnick and national hospitality consulting firm Pinnacle Advisory Group have formed a strategic alliance to broaden the business platform, depth of expertise and knowledge base of both companies to provide superior asset management and hospitality advisory services to their respective clientele, according to the companies.
Beyond the $15 billion in lodging real estate overseen as part of the asset management platform, the alliance collectively is advising owners and lenders on approximately 250 lodging projects annually, including hotel development, repositioning, management/brand selection, operations assessment, acquisition due diligence and ownership-entity accounting services. The two companies will serve an asset management portfolio of approximately 80 hotels with more than 32,000 rooms nationwide, representing virtually all segments and major brands, as well as a growing number of independent and lifestyle properties and select-service portfolios. While the headquarters of both businesses are located in the Boston area, both companies have offices around the country.
Chad Crandell, managing director and CEO of CHMWarnick, said both companies have experience in advising clients through economic cycles and “black swan” events. This experience, he added, is “not easily replicated yet required more than ever in today's evolving market.”
Pinnacle, led by Principal Rachel Roginsky, guides investors from initial feasibility and branding strategy to operational reviews and competitive impact studies. Often, Pinnacle’s work is on the front end of an investment strategy, providing due diligence and advisory prior to the development of an asset or during the initial stage of an acquisition. “Rachel and I came up through the industry ranks with a classical training in hospitality consulting, which includes comprehensive advisory capabilities, or what we refer to is cradle to grave, meaning from acquisition to disposition,” Crandell said.
From Pinnacle's perspective, Roginsky saw the opportunity as “an ideal match” between two companies. “We fit like a hand in a glove,” she said. The two companies have been actively working together “in a collaborative capacity” for several months across multiple client engagements, and Roginsky said the synergies between them have already proven valuable.
Crandell agreed: “When we start to see our pipeline begin to fill up—which it is doing—we start to add resources because we need the resources to be able to address the growth. So we're making the investment now.” The company has grown its staff by almost 10 percent since the new year, and Crandell expects that to translate into somewhere between 10 and 15 percent growth from a revenue standpoint. “We expect that to continue well into 2022 and beyond.” Pinnacle, a smaller company, has added one team member, and Roginsky expects similar growth to CHMWarnick's.
The COVID-19 pandemic has been the “greatest challenge ever” that hotel owners have faced, Crandell said, and businesspeople are seeking strategies to maintain control of their assets and position themselves for recovery. Lenders, meanwhile, have seen their options and forbearance periods come to an end and must decide whether or not to exercise their foreclosure rights. “We are also seeing opportunity funds with historically high levels of capital to deploy and a very strong appetite for investing in the hospitality sector,” he added. “These factors, among other dynamics, have led to unprecedented demand for highly sophisticated consulting and asset management services.” As such, he added, hospitality consulting has become increasingly commoditized over the last few years as companies have looked to expand and add on new services to capitalize on continually growing needs.
Services & Technology
The alliance will give Pinnacle clients seeking professional oversight access to CHMWarnick’s asset management and accounting platform and related services. Likewise, CHMWarnick can tap into Pinnacle’s market research and trends analysis to support their clients with acquisition opportunities, strategic repositioning and development planning and on asset management engagements.
CHMWarnick has made a significant investment in recent years into developing asset management technology, Roginsky said, and specifically their business intelligence platform Proph+IT, which gathers data streams from the hotels that the company asset manages. “We see tremendous value in not only adding to our team's financial benchmarking capabilities, but also giving us a platform that we can leverage with our asset management clients,” she said.
Applying the BI technology to Pinnacle's asset management projects and their consulting work will make analyzing and organizing data easier, freeing up the team to “play a role that's more strategic to their clients,” said Chad Sorensen, managing director and COO of CHMWarnick. “The goal is to leverage our expertise and not spend time on data entry and things of that nature ... It's going to really allow them to up their game and take on more projects—larger projects—and be more strategic in the way they do business.”
In terms of the market, CHMWarnick is seeing increased transaction activity with full-service hotels. "That's the area where we see probably the more pent-up demand," Crandell said, noting that limited and select-service hotels started recovery first, and many are "almost consistent" with 2019's numbers. "We're starting to see a lot of interest by all this equity that has been raised."
Pinnacle primarily works on select-service hotels, Roginsky said, and since they handle due diligence around the country, the team has seen markets that are well into recovery. Still, improved occupancy doesn’t automatically mean that things are better. One team member came back from interviewing a manager, Roginsky recalled, and had to follow the manager around the hotel as he made the guestroom beds. “There is just no staff at some of these properties,” she said. “Many markets are starting to recover, but there are operating issues that they have to deal with now.”